The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in African and Overseas Enterprises (JSE:AOO). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for African and Overseas Enterprises

How Fast Is African and Overseas Enterprises Growing Its Earnings Per Share?

African and Overseas Enterprises has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. To the delight of shareholders, African and Overseas Enterprises' EPS soared from R2.51 to R4.08, over the last year. That's a fantastic gain of 63%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for African and Overseas Enterprises remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 20% to R720m. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

African and Overseas Enterprises isn't a huge company, given its market capitalisation of R150m. That makes it extra important to check on its balance sheet strength.

Are African and Overseas Enterprises Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. Our analysis has discovered that the median total compensation for the CEOs of companies like African and Overseas Enterprises with market caps under R3.7b is about R6.1m.